FINANCIAL ACCOUNTING
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ISBN: 9781259964947
Author: Libby
Publisher: MCG
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On January 1, 2015, Traylor Company, an 80%-owned subsidiary of Parker Electronics, Inc., signed a 4-year directfinancing lease with its parent for the rental of electronic equipment. The lease agreement requires a $12,000 payment on January 1 of each year, and title transfers to Traylor on January 1, 2019. The equipment originally cost $40,822 and had an estimated remaining life of five years at the start of the lease term. The lessor’s implicit interest rate is 12%. The lessee also used the 12% rate to record the transaction.
Question: Prepare the eliminations and adjustments for the December 31, 2016, consolidated worksheet.
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- Skor Co. leased equipment to Douglas Corp. on January 2, 2011, for an 8-year period expiring December 31, 2018. Equal payments under the lease are $600,000 and are due on January 2 of each year. The first payment was made on January 2, 2011. The cost of the equipment is $2,800,000. The lease is appropriately accounted for as a sales-type lease. The present value of the lease payments is $3,300,000. What amount of net profit on the sale should Skor report for the year ended December 31, 2011? a. $720,000 b. $500,000 c. $90,000 d. $600,000 e. $2,800,000arrow_forwardSkor Co. leased equipment to Douglas Corp. on January 2, 2011, for an 8-year period expiring December 31, 2018. Equal payments under the lease are $600,000 and are due on January 2 of each year. The first payment was made on January 2, 2011. The cost of the equipment is $2,800,000. The lease is appropriately accounted for as a sales-type lease. The present value of the lease payments is $3,300,000. What amount of net profit on the sale should Skor report for the year ended December 31, 2011? a. $720,000 b. $500,000 c. $90,000 d. $600,000 e. $2,800,000arrow_forwardOn January 1, 2015, Traylor Company, an 80%-owned subsidiary of Parker Electronics, Inc., signed a 4-year directfinancing lease with its parent for the rental of electronic equipment. The lease agreement requires a $12,000 payment on January 1 of each year, and title transfers to Traylor on January 1, 2019. The equipment originally cost $40,822 and had an estimated remaining life of five years at the start of the lease term. The lessor’s implicit interest rate is 12%. The lessee also used the 12% rate to record the transaction. Question: Prepare the eliminations and adjustments required for this lease on the December 31, 2015, consolidated worksheet.arrow_forward
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